Your complete guide to the top current accounts: We sort the giveaways from the gimmicks

British banking has had a facelift after a string of new current account launches. The latest comes from Tesco and is hot on the heels of M&S’s new fee-free account.

For those wondering whether it is worth trading the devil you know for a fresh current account, The Mail on Sunday helps sort the gimmicks from the giveaways.

BEST FOR SAVINGS

CLUB LLOYDS: Interest of 4 per cent is paid on balances of between £4,000 and £5,000 – in other words £128 to £160 after tax for basic rate taxpayers. Lower rates of interest are paid on smaller sums.

The account comes with one ‘Lifestyle Benefit’ a year from a choice of three: dining out discounts with a Gourmet Society membership, six Vue cinema tickets or an annual magazine subscription.

As with most other deals, customers must have two monthly direct debits coming out of the account and must pay in a set sum each month to benefit. In Lloyds’ case they must pay in at least £1,500 a month to avoid the £5 monthly fee.

Why is it best? It is a good choice for people with some savings. According to a Future of Savings report by the Post Office, the average household will have savings of £3,630 this year. These savings provide a great starting point for someone who wants the 4 per cent rate.

Runners-up: Santander’s 123 account is a generous option for those with more than £5,000 to save and attracts a maximum 3 per cent on balances up to £20,000. The bank also pays cashback on bills, which is likely to cover the £2 monthly fee.

Nationwide Building Society offers 5 per cent on its fee-free FlexDirect account. But this is only for savings of £2,500 or less and the interest rate falls to 1 per cent after the first year.

After tax, the first year’s interest is no more than the £100 ‘golden hello’ that other banks offer to new customers.

Halifax pays £5 a month after tax for its Reward Account – the equivalent of 5 per cent on savings of £1,500.

'AFTER 40 YEARS I'VE QUIT MY BANK FOR MARKS & SPENCER'

Pauline Mellor only recently opened a fee-free bank account with Marks & Spencer. Despite not coming top in any of The Mail on Sunday’s categories, it is a good ‘all-round’ account.

It offers a £100 gift card for joining, loyalty points on spending, an automatic £500 overdraft with a fifth of that interest-free and there are no fees applied for withdrawing money from cashpoints while abroad.

Pauline, from New Moston in North-East Manchester, ended a 40-year relationship with Barclays to be among the first wave of customers signing up to the new account.

The married grandmother-of-four, who works part time supervising schoolchildren at lunchtime, used the Current Account Switch Service, which automatically shifts everything from one account to another and comes with additional guarantees and safeguards in case anything goes wrong.

‘I’m very pleased with it all,’ says Pauline, 70. ‘My wages, direct debits and state pension were all transferred across.

‘The bank’s opening hours are also convenient. It’s open whenever the shop is.’

BEST FOR PERKS

TESCO CURRENT ACCOUNT: Customers can build up points whenever they spend money. One point is earned for every £4 spent in a Tesco store and one point for every £8 spent elsewhere. Each point is worth 1p.

Interest of 3 per cent is paid on balances of up to £3,000 held in the account. Paying £750 a month into the account ensures exemption from the £5 monthly fee.

Why is it best? Reward points aren’t limited to groceries. Clubcard members can boost the value of points fourfold if they are converted to vouchers for days out at Warwick Castle or Woburn Safari Park, or on meals out and travel, for instance.

Runners-up: Tesco’s account is online-only, so anyone wanting a branch-based bank should consider Halifax, M&S and Club Lloyds. As well as paying £5 for every month that £750 is deposited, Halifax’s Reward account offers a £100 sweetener to new customers.

The M&S account, which has no monthly fee and was launched last month, offers one point per pound spent on the account’s debit card in store and each point is worth 1p.

As well as offering benefits such as cinema tickets, Club Lloyds gives exclusive cashback deals.

BEST FOR BORROWING

FIRST DIRECT 1ST ACCOUNT: This online-only account comes with a £500 overdraft, of which £250 is interest-free. It also comes with a good reputation for service. A subsidiary of HSBC, First Direct pays £100 to new customers and promises £100 to those unhappy enough to leave within a year. Fee-free if £1,000 is paid in each month.

Why is it best? An overdraft automatically comes with the account and is available for as long as the account is kept by a customer.

Runners-up: Nationwide’s FlexDirect account offers an interest-free overdraft for the first 12 months. M&S gives an automatic £500 overdraft, the first £100 of which is interest-free. Both providers also have branches on the high street.

BEST FOR SERVICE

NATIONWIDE FLEXDIRECT: Pay in £1,000 a month to receive 5 per cent interest on balances up to £2,500, exclusive discounts and a fee-free overdraft for 12 months. There is no monthly fee.

Why is it best? It scores highly in customer satisfaction surveys and tops a ‘good value’ league table by FairerFinance. The website ranks providers according to what customers say about them, complaints handling and transparency.

Runners-up: Metro Bank is also renowned for good customer service but the majority of the branch network is currently limited to the South-East. Online banks First Direct and Smile – a subsidiary of the Co-op Bank – also get favourable reviews.

HOW TO SWITCH

- Compare the accounts on offer at comparison websites run by MoneySuperMarket and Which?

- To find out more about how to change banks using the Current Account Switch Service try its dedicated website simplerworld.co.uk or ask for details in a bank branch.